Arrow Electronics, Inc. · NYSE:ARW
Arrow Electronics — Q2 2024 Earnings Presentation
25 slides from Arrow Electronics's earnings presentation, Aug 1, 2024
Slide 1: Arrow Electronics Earnings Presentation Second Quarter 2024
Arrow Electronics Earnings Presentation Second Quarter 2024 August 1, 2024
Slide 2: Safe harbor
Safe harbor This presentation includes “forward-looking” statements, as the term is defined under the federal securities laws, including but not limited to statements regarding: Arrow’s future financial performance, including its outlook on financial results for the third quarter of fiscal 2024 such
Slide 3: Sean Kerins, President and CEO
Sean Kerins President and CEO 3
Slide 4: Q2 2024 highlights
Q2 2024 highlights CONSOLIDATED SALES OPERATING MARGIN1 DILUTED EARNINGS PER SHARE1 $ 6.9 Billion 3.8 Percent $ 2.78 • Revenue and earnings per share exceeded high end of guidance range • Additional Q2 2024 financial information: • $262 million operating income1 • $150 million net income1 • $320 mil
Slide 5: Global components
Global components • Signs of incremental improvements across several markets, though conditions have not fully normalized • Structural margin health, well above levels of prior downcycles • Regional second-quarter perspectives: • APAC – Semiconductor and IP&E revenue grew with relative strength in C
Slide 6: Enterprise computing solutions
Enterprise computing solutions • Cloud- and AI-solutions and server demand contributed to overall results • Regional second-quarter perspectives: • EMEA – year-over-year billings and gross profit dollar growth; strength in hybrid cloud adoption as we expand line card • North America – relative stren
Slide 7: Closing thoughts
Closing thoughts • Anticipate a stronger 2024 second half • Arrow positioned for future growth cycles: • Supply chain services scaling next generation AI infrastructure • Engineering and integration offerings deploying AI solutions • Robotics Center of Excellence designing future technology solution
Slide 8: Raj Agrawal, Senior Vice President and CFO
Raj Agrawal Senior Vice President and CFO 8
Slide 9: Q2 2024 revenue ($6.9B consolidated)
Q2 2024 revenue ($6.9B consolidated) Global Components Enterprise Computing Solutions Asia Pacific 1.6 $ B 24% 1.0 $ 4% 2.0 B $ Americas B 18% $5.0 B $ 1.9 B Americas 25% 2% EMEA EMEA $0.9 B 8% 1.4 $ B 33% Revenue figures are GAAP and reflect year-on-year performance changes Amounts may not calculat
Slide 10: Q2 2024 financial metrics
Q2 2024 financial metrics Sales & Non-GAAP Gross Margin1 Non-GAAP Operating Expenses1 8.5 656 618 6.9 6.9 586 8.9% 8.5% 12.5% 12.5% 12.3% 7.7% Q2 '23 Q1 '24 Q2 '24 Q2 '23 Q1 '24 Q2 '24 Sales ($B) Gross Margin (%) Opex ($M) Opex (%) Non-GAAP Operating Income1 Non-GAAP Diluted EPS1 410 4.37 2.41 2.78
Slide 11: Working capital
Working capital Net Working Capital ($B) • Non-GAAP Return on Working Capital (ROWC)1 was 15.5% in the second quarter, 11.0 11.1 10.9 7.5 6.9 6.8 Accounts down 640 basis points year on year. The 5.5 Receivable 4.8 4.7 decrease in ROWC related primarily to lower Inventory operating income in global c
Slide 12: Q2 2024 balance sheet and cash highlights
Q2 2024 balance sheet and cash highlights Operating Cashflow was $320M in Q2 Net Debt was $3.1B Repurchased $50M in shares 12
Slide 13: Q3 2024 guidance
Q3 2024 guidance Consolidated Sales $6.37 billion to $6.97 billion Global components $4.70 billion to $5.10 billion Global ECS $1.67 billion to $1.87 billion Diluted Earnings Per Share* $1.70 to $1.90 Non-GAAP Diluted Earnings Per Share* $2.10 to $2.30 Interest and other expense, net $70 million * A
Slide 14: Thank You Q&A
Thank You Q&A AGW
Slide 15: Additional information and financial tables
Additional information and financial tables 15
Slide 16: Consolidated second-quarter overview
Consolidated second-quarter overview ($ in millions, except per share data) Q2 2024 Q2 2023 Y/Y CHANGE Q2 2023 IN Y/Y CHANGE IN Q1 2024 Q/Q CHANGE CONSTANT CONSTANT P&L Highlights* CURRENCY CURRENCY Sales $6,893 $8,515 -19% $8,462 -19% $6,924 0% Gross Profit Margin 12.3% 12.5% -20 bps 12.5% -20 bps
Slide 17: Revenue history
Revenue history ($ in millions, may reflect rounding) YoY QoQ Q2’23 Q3 ’23 Q4’23 Q1’24 Q2’24 change change Global Components Total $6,683 $6,245 $5,636 $5,191 $5,032 -25% -3% Americas 2,067 1,870 1,785 1,597 1,573 -24% -2% Europe, Middle East & Africa 2,153 1,987 1,688 1,657 1,439 -33% -13% Asia Pac
Slide 18: Operating income history
Operating income history Global Components ($M) Enterprise Computing Solutions ($M) $145 $146 $381 $388 $379 $386 $103 $104 $281 $288 $86 $87 $243 $73 $226 $71 $210 $218 $55 $56 Q2-'23 Q3-'23* Q4-'23 Q1-'24 Q2-'24 Q2-'23 Q3-'23* Q4-'23 Q1-'24 Q2-'24** GAAP Non-GAAP GAAP Non-GAAP * Q3-’23 operating i
Slide 19: Certain Non-GAAP financial information
Certain Non-GAAP financial information In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States (“GAAP”), the company also provides certain non-GAAP financial information relating to sales, gross profit, operatin
Slide 20: Third-quarter 2024 GAAP to non-GAAP outlook reconciliation
Third-quarter 2024 GAAP to non-GAAP outlook reconciliation ($ in billions, except per share data) NON-GAAP SALES RECONCILIATION Quarter Ended Quarter Ended 28-Sep-24 30-Sep-23 % Change 28-Sep-24 29-Jun-24 % Change Global components sales, GAAP $ 4.70 - 5.10 $ 6.25 (25%) - (18%) $ 4.70 - 5.10 $ 5.03
Slide 21: Quarterly GAAP to non-GAAP reconciliation
Quarterly GAAP to non-GAAP reconciliation ($ in thousands, except per share data) Three months ended June 29, 2024 Intangible (1) Includes write downs of inventory Reported GAAP Amortization Restructuring & Impact of Wind Down Non- recurring tax related to the wind down of a business. measure Expens
Slide 22: Gross profit reconciliation
Gross profit reconciliation ($ in thousands) Quarter Ended 7/1/2023 9/30/2023 12/31/2023 3/30/2024 6/29/2024 Consolidated Gross Profit, as reported $ 1,066,049 $ 979,597 $ 989,550 $ 857,826 $ 846,444 Impact of wind down to inventory - - - 10,459 1,627 Consolidated non-GAAP gross profit $ 1,066,049 $
Slide 23: Return on working capital reconciliation
Return on working capital reconciliation ($ in thousands) Quarter Ended June 29, 2024 July 1, 2023 Numerator: Consolidated operating income, as reported $ 212,275 $ 392,250 x4 x4 Annualized consolidated operating income $ 849,100 $ 1,569,000 Non-GAAP consolidated operating income $ 261,895 $ 410,491
Slide 24: Return on invested capital reconciliation
Return on invested capital reconciliation ($ in thousands) Quarter Ended June 29, 2024 July 1, 2023 (1) Operating income, as reported, and non- GAAP operating income is adjusted for Numerator: noncontrolling interest and equity in earnings Consolidated operating income, as reported $ 212,275 $ 392,2
Slide 25: Non-GAAP segment reconciliation
Non-GAAP segment reconciliation ($ in thousands) Quarter Ended 7/1/2023 9/30/2023 12/31/2023 3/30/2024 6/29/2024 Global components operating income, as reported $ 381,314 $ 379,053 $ 281,260 $ 225,562 $ 210,201 Intangible assets amortization expense 6,679 6,640 6,436 6,488 6,399 Impact of wind down